When following the economic unit concept in the preparation of consolidated financial statements, the basis for valuing the noncontrolling interest in net assets is the:
A) book values of subsidiary assets and liabilities.
B) fair values of subsidiary assets and liabilities.
C) general price level adjusted values of subsidiary assets and liabilities.
D) fair values of parent company assets and liabilities.

Question

Quizplus · Accepted Answer

The economic unit concept in the preparation of consolidated financial statements values the noncontrolling interest in net assets based on the fair values of subsidiary assets and liabilities. This approach reflects the true economic value of the subsidiary's assets and liabilities at the time of acquisition.

When Following the Economic Unit Concept in the Preparation of Consolidated